The perpetual corporation, I’m a fan !

30 years of serving as owners, managers and managers of companies in several countries have given me a vision of the functioning of a company or a group at several levels; operation, management, direction, governance and shareholding.

It was as an independent fiduciary agent that I started, or some would say “firefighter”, because my first mandates were to rescue companies, often close to bankruptcy.

Over time, with experience in accounting, taxation and then finance and a few languages spoken, it is internationally that my mandates have evolved.

When I first heard about the perpetual partnership, I wanted to know more, it seemed obvious to me on first reading Marc Deschenaux’s article that there was a bit genius in this concept

From then on, I decided to learn more and work on setting up new perpetual companies.

Here is an excerpt from an article that inspired me and presents in a simple way the foundations of the concept:

“Imagine a company, a corporation or any type of capital entity financially but not legally structured as a foundation, raising a large amount of money, without spending any of it.

Through an initial public or private subscription, the initial capital would be of a high amount, for example a hundred million dollars.

The corporation invests the money in real estate and fix income securities and spends only part of the interest generated as operative budget of the corporation.

When the corporation generates profit, the corporation adds it to the initial capital raised and thus, increases its next year budget. Management and staff bonuses are directly indexed on this budget, thus increased.

When the corporation generates a loss, the corporation pays to its shareholders the same amount of the loss as dividends, deducting it from the initial capital raised and thus, decreases its next year budget. Management and staff bonuses are directly indexed on this budget, thus decreased.

The resulting long term stability arising from this system is amazing because Management can no longer ignore, neglect or procrastinate shareholder value. All parties’ interests between Management, Staff, Investors, Shareholders and Creditors are aligned.

Its annual budget including tax could not exceed his assets in cash multiplied by the annual interest rate as a percentage guaranteed by its banks collectively.

By this formula we would create a company that I call perpetual, because apart from the imponderables such as liabilities or tax increases, the company could theoretically last for centuries or even indefinitely.

As long as the inequality that says the operating budget must always be less than the risk-free income produced by the initial capital investment would be verified, there would be no risk other than the risks attached to the investment of capital.

Do You realize these competitive advantages of the Perpetual Company?

  1. The management could always think long-term.
  2. It would have endless bargaining power within its means.
  3. Thus it would never have to accept a compromised deal.
  4. Its growth on the stock exchange would be steady.
  5. Nobody would have to worry about the corporate existence.

I could go on and on for hours about the quality of this new kind of company.”

Credit :Marc Deschenaux & IPO Institute
Initial article :